Analysis: Simon Jack, BBC business editor:

ARM is arguably the most precious jewel in the crown of British technology.

Softbank considers ARM well placed to exploit the “internet of things” – the embedding of microchips in whole new categories of household and business devices.

But the proposed takeover poses a dilemma for the new government.

Along with high executive pay, Prime Minister Theresa May has put foreign takeovers on her radar of business dealings that may be bad for the national interest.

However, the government will be keen to show that the recent Brexit vote has not deterred foreign investment.

Barring government intervention, the final decision will be made by shareholders.

‘Market leader’

Masayoshi Son, chairman and chief executive of Softbank, said: “This is one of the most important acquisitions we have ever made, and I expect ARM to be a key pillar of SoftBank’s growth strategy going forward,

“We have long admired ARM as a world renowned and highly respected technology company that is by some distance the market leader in its field.”

Mr Son added: “ARM will be an excellent strategic fit with the Softbank group as we invest to capture the very significant opportunities provided by the internet of things”

Chancellor Phillip Hammond reacted to the news of the takeover by saying it showed UK companies had lost none of their “allure to international investors”.

“Britain is open for business – and open to foreign investment. Softbank’s decision confirms that Britain remains one of the most attractive destinations globally for investors to create jobs and wealth.

“And as ARM’s founders will testify, this is the greatest place in the world to start and grow a technology business,” he added.